How business owners can improve employee benefits while taking back control of healthcare costs.
Your employee benefits plan should help you compete for talent and support the people who keep your business moving. But when healthcare costs are difficult to understand and renewal decisions feel rushed, it can seem like your only options are paying more or asking employees to shoulder more of the expense.
That is too narrow a conversation.
A stronger employee benefits strategy starts with understanding what your plan buys, how employees access care, and whether the people serving your plan are working toward the same goals.
At Palomar, that conversation centers on four pillars: access to data, access to better care, access to lower prices, and access to aligned incentives.
1. Access to Data: Understand What Is Driving Your Costs
If you cannot see it, you cannot manage it.
A renewal increase tells you what you are being asked to pay. It does not necessarily explain why costs changed or what you can do about them.
Employers need information that helps turn hcare spending into actionable decisions. Depending on your plan and the information available, that may include medical and pharmacy spending trends, patterns in where employees receive care, and the administrative costs behind the plan.
The goal is not to collect reports for the sake of having reports. It is to answer practical questions:
- What is driving our healthcare spending?
- Are changes coming from the price of care, the amount of care used, or both?
- Are employees having trouble finding or using appropriate care?
- What information is missing, and how does that limit our decisions?
- How will we measure whether a change actually helps?
Access to information varies by funding arrangement, carrier, and contract. Employee health information must also be handled with appropriate privacy protections. Employers should seek useful, appropriately aggregated reporting, not individual employees’ private medical details.
The right data will not eliminate every surprise. It can give you a clearer starting point than a renewal percentage alone.
2. Access to Better Care: Make Benefits Easier to Use
Controlling costs should not simply mean increasing deductibles or shifting more expenses to employees.
A plan can look affordable on a spreadsheet while leaving employees struggling to find a provider, understand their coverage, or afford the care they need. That is not a strong foundation for attracting and retaining talent.
A better approach asks how the plan can help employees reach appropriate, high-value care. Areas to evaluate include:
- Primary care: Can employees establish a relationship with a provider and get timely help?
- Care navigation: Do employees know where to turn when they need a specialist, a procedure, or help understanding their options?
- Mental health: Are services accessible in practice, not just listed in a benefits summary?
- Virtual care: Is it a useful option for appropriate needs, with clear costs and instructions?
- Pharmacy management: Can employees access needed medications, understand coverage requirements, and explore clinically appropriate alternatives?
- Provider access: Does the plan connect employees with providers suited to their needs?
Adding another program is not automatically the answer. First, understand where employees encounter friction and whether existing benefits are being used effectively.
Clear communication matters, too. Employees should not have to become benefits experts to find help. They need straightforward guidance about what is available, how to use it, and whom to contact.
3. Access to Lower Prices: Look Beyond the Insurance Renewal
Negotiating an insurance renewal and addressing the underlying cost of healthcare are not the same thing.
A smaller-than-expected renewal increase may help this year’s budget. But it does not necessarily change what the plan pays for medical services, prescriptions, or administration.
Employers should ask what opportunities exist to address those costs directly. Depending on the plan, that could mean evaluating provider pricing, pharmacy contract terms, network options, or the settings in which employees receive appropriate care.
Price should not be considered in isolation. A lower-priced option is only useful if it also offers appropriate quality, access, and a workable experience for employees.
Choose Funding to Support the Strategy
Fully insured, level-funded, and self-funded arrangements are tools. None is the right answer for every employer.
The appropriate arrangement depends on factors such as your workforce, financial position, risk tolerance, available data, administrative resources, and contractual terms.
Instead of starting with “Should we self-fund?” start with:
- What are we trying to improve?
- What financial risk can our business reasonably manage?
- What information and flexibility would each option provide?
- What protections, responsibilities, and limitations come with it?
- How would the change affect employees?
The funding decision should support your benefits strategy, not replace it.
4. Access to Aligned Incentives: Know Who Gets Paid and Why
A health plan involves multiple organizations, potentially including an insurer, administrator, pharmacy benefit manager, advisor, and other service providers.
Employers should understand what each party does, how each is paid, and whether those payment arrangements support the employer’s and employees’ interests.
Useful questions include:
- What services are included, and what costs extra?
- Is compensation based on fees, commissions, a percentage of spending, or another arrangement?
- Are there rebates, credits, or other payments? Who receives them?
- Are there financial incentives that could influence recommendations?
- What results is each partner responsible for delivering?
- How will we evaluate performance?
The point is not to assume that one compensation model is always better than another. It is to make the arrangements understandable and examine where interests may diverge.
Employers should be able to ask direct questions and receive clear answers about the value they are buying.
Put the Four Pillars to Work Before Your Next Renewal
You do not need to rebuild your benefits plan all at once. Start by identifying the questions your current process does not answer.
Bring leadership, finance, and HR together to define what a better plan would accomplish. That may include a more sustainable budget, easier access to care, clearer reporting, or a better employee experience.
Then review the four pillars together:
- Data: What can we see, and what do we still need to understand?
- Better care: Where do employees face obstacles to appropriate care?
- Lower prices: Are we addressing healthcare costs or only negotiating the renewal?
- Aligned incentives: Do we understand how our partners are paid and what they deliver?
Use those answers to evaluate options before renewal deadlines force rushed decisions. Any proposed changes should also be reviewed for applicable legal, regulatory, contractual, and employee-communication requirements.
Build Benefits Around Your Business and Your People
Winning talent and managing healthcare costs should not be treated as opposing goals.
Your benefits plan should help employees access care while giving your business a clearer understanding of spending, options, and accountability.
The starting point is not a particular funding model or a longer list of benefits. It is better questions, useful information, and a strategy built around your workforce.
Talk with Palomar’s employee benefits team about how access to data, better care, lower prices, and aligned incentives can guide your next benefits review.
